Attached files
| file | filename |
|---|---|
| 8-K - Precipio, Inc. | v207089_8k.htm |
| EX-4.2 - Precipio, Inc. | v207089_ex4-2.htm |
| EX-4.5 - Precipio, Inc. | v207089_ex4-5.htm |
| EX-2.1 - Precipio, Inc. | v207089_ex2-1.htm |
| EX-4.4 - Precipio, Inc. | v207089_ex4-4.htm |
| EX-4.3 - Precipio, Inc. | v207089_ex4-3.htm |
| EX-4.1 - Precipio, Inc. | v207089_ex4-1.htm |
| EX-2.2 - Precipio, Inc. | v207089_ex2-2.htm |
| EX-99.1 - Precipio, Inc. | v207089_ex99-1.htm |
| EX-10.1 - Precipio, Inc. | v207089_ex10-1.htm |
| EX-10.2 - Precipio, Inc. | v207089_ex10-2.htm |
| EX-10.3 - Precipio, Inc. | v207089_ex10-3.htm |
Exhibit 3.1
CERTIFICATE
OF DESIGNATION OF
SERIES
A CONVERTIBLE PREFERRED STOCK
OF
TRANSGENOMIC,
INC.
Pursuant
to Section 151 of the
General
Corporation Law of the
State
of Delaware
Transgenomic,
Inc., a corporation organized and existing under the General Corporation Law of
the State of Delaware (the “Corporation”), does
hereby certify that, pursuant to the authority conferred upon the Board of
Directors by the Third Restated Certificate of Incorporation of the Corporation
(as amended from time to time, the “Certificate of
Incorporation”), and pursuant to the provisions of Section 151 of the Delaware General Corporation Law, the Board
of Directors of the Corporation (the “Board”) duly adopted
a resolution on December 27, 2010, providing for the issuance of up to Three
Million Eight Hundred Seventy-Nine Thousand Three Hundred and Seven (3,879,307)
shares of the Preferred Stock, which shall be a series designated as Series A
Convertible Preferred Stock, par value $0.01 per share (“Series A
Preferred”).
Pursuant
to such resolution and the authority conferred upon the Board by the Certificate
of Incorporation, there is hereby created the Series A Preferred, which series
shall have the following voting powers, designations, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions thereof, in addition to those set forth in the Certificate of
Incorporation:
Section
1. Designation and Amount of
Series A Preferred. Three Million Eight Hundred Seventy-Nine
Thousand Three Hundred and Seven (3,879,307) shares of the Preferred Stock shall
be a series designated as Series A Convertible Preferred Stock of the
Corporation. Shares of Series A Preferred shall have an initial value
of $2.32 per share (the “Series A Stated
Value”) and par value per share of $0.01.
Section
2. Voting
Rights.
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(a)
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General. Except
as set forth in Sections 2(b)
and 2(c)
herein and as otherwise required by law, the holders of the Series A
Preferred shall be entitled to that number of votes equal to the number of
whole shares of the Corporation’s common stock, par value $0.01 per share
(“Common
Stock”) into which the Series A Preferred may be converted as of
the date such vote is held. Except as otherwise provided herein
or as required by law, the holders of the Series A Preferred shall vote
together as a single voting group with the holders of the Common Stock on
all matters submitted to a vote of the Corporation’s
stockholders. Fractional votes shall not be
permitted. Whenever any matter is required to be approved by
the holders of the Series A Preferred as a separate group, such consent
shall require the approval of the holders of greater than fifty percent
(50%) of the then outstanding shares of Series A Preferred. The
approval from the holders of the Series A Preferred required by Section 2(b)
below is not intended to create a separate class voting right or require a
stockholder vote, but rather constitutes a requirement of approval (which
does not have to be obtained or given in the manner required for
stockholder votes) necessary for certain actions in addition to any
stockholder approval otherwise required under the Certificate of
Incorporation or by law.
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(b)
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Negative
Covenants. So long as any shares of Series A Preferred
are outstanding, the Corporation shall not, without the prior written
consent of the holders of more than a majority of the outstanding shares
of Series A Preferred:
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(i)
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Authorize,
create or issue (by reclassification or otherwise) any other class or
series of capital stock having rights, preferences or privileges senior to
or in parity with the Series A
Preferred;
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(ii)
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Alter
or change the rights, preferences or privileges of the Series A Preferred
or increase or decrease the authorized number of shares of Series A
Preferred;
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(iii)
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Authorize
the declaration of dividends on the Common Shares (as hereinafter defined
in Section
4(e)(vi)) or any other shares of capital stock other than the
Series A Preferred, other than dividends payable solely in Common
Shares;
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(iv)
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Authorize
any offering of equity securities of the Corporation representing (on a
pro forma basis after giving effect to the issuance of such equity
securities) the right to receive not less than ten percent (10%) of any
amounts or funds that would, as of immediately following such issuance, be
legally available for distribution in connection with a Liquidation Event
(as defined in Section
7);
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(v)
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Redeem
any shares of capital stock (other than pursuant to employee agreements or
the terms of the capital stock);
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(vi)
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Increase
or decrease the authorized number of members of the
Board;
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(vii)
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Enter
into any binding agreement with any director, employee or any affiliate of
the Corporation;
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(viii)
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Materially
change the nature of the Corporation’s business, enter into new lines of
business or exit the current line of business or invest in any person or
entity engaged in a business that is not substantially similar to the
Corporation’s business, or change the location of any permanent location
of any part of the Corporation’s business, in each case except as
contemplated by that certain Asset Purchase Agreement, dated as of
November 29, 2010, by and among PGxHealth, LLC, Clinical Data, Inc. and
the Corporation (the “Asset Purchase
Agreement”) or any of the transaction documents included
therein;
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(ix)
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Make
any loans or advances, individually or in the aggregate in excess of
$1,000,000, to, or own any stock or other securities of, any subsidiary or
other corporation, partnership or other entity unless it is wholly owned
by the Corporation;
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(x)
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Make
any loan or advance to any natural person, including, without limitation,
any employee or director of the Corporation, except advances and similar
expenditures in the ordinary course of
business;
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(xi)
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Guarantee,
directly or indirectly, any indebtedness except for trade accounts of the
Corporation arising in the ordinary course of
business;
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(xii)
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Sell
or otherwise dispose of any assets of the Corporation with a value,
individually or collectively, in excess of $500,000 other than in the
ordinary course of business;
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(xiii)
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Liquidate,
dissolve or wind-up the business and affairs of the Corporation or effect
a Change in Control (as defined below) or any other Liquidation
Event. For purposes hereof, a “Change in
Control” means (x) a merger, consolidation, share exchange or other
transaction involving the Corporation or any of its subsidiaries or the
stockholders of the Corporation; (y) the sale or transfer of a number of
shares of voting capital stock of the Corporation or any securities
convertible into or exchangeable for voting capital stock in any one (1)
year period that, pursuant to either (x) or (y), results in one person or
entity or an affiliated group of persons or entities, other than the
stockholders of the Corporation immediately preceding the consummation of
such transaction(s) either (i) owning in excess of fifty percent (50%) of
the total voting capital stock of the Corporation taking into account
issued and outstanding shares of such stock and any other shares of such
capital stock that would be issued and outstanding assuming conversion or
exchange of any and all other securities of the Corporation so convertible
or exchangeable or (ii) being able to elect a majority of the Board of
Directors; or (z) the sale, lease, abandonment, transfer or other
disposition by the Corporation or any of its subsidiaries of all or
substantially all the assets of the Corporation and its subsidiaries taken
as a whole, excluding the grant of a security interest by the Corporation
in all or substantially all of its assets in connection with the Asset
Purchase Agreement or to a bank pursuant to a bona fide financing
arrangement approved by the Board, which approval includes the approval of
all of the Series A Directors. Only for purposes of (y) hereof,
(i) transfers due to the death of a stockholder or (ii) transfers to a
member of a stockholder’s immediate family, family limited partnership,
family limited liability company or a trust of which the beneficiary is
such immediate family member shall not be considered as
transfers;
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(xiv)
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Incur
any indebtedness in excess of $1,000,000 in the aggregate other than trade
credit incurred in the ordinary course of business or as contemplated by
the Asset Purchase Agreement;
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(xv)
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Expend
funds in excess of $500,000 in the aggregate per year for capital
improvements or other infrastructure of the Corporation, other than any
such expenditure that is consistent with a budget approved by the Board of
Directors, including the Series A Directors (as defined below) or as
contemplated by the Asset Purchase
Agreement;
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(xvi)
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Obligate
the Corporation, by contract or otherwise, to make aggregate annual
payments in excess of $500,000 or sell, transfer, pledge or license any
material technology or intellectual property of the Corporation other than
a non-exclusive license in the ordinary course of business, in each case
except as contemplated by the Asset Purchase Agreement;
or
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(xvii)
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Increase
the number of shares reserved and issuable under any of the Corporation’s
equity or option incentive compensation
plans.
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(c)
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Election of
Directors. The holders of Series A Preferred shall be
entitled, as a separate voting group, at each annual or special election
of directors, to elect two (2) directors (“Series A
Directors”). The holders of the Common Shares shall be
entitled, as a separate voting group, at each annual or special election
of directors, to elect all remaining directors. In the case of
a vacancy in the office of any Series A Director, the holders of the
outstanding Series A Preferred, voting exclusively as a separate class in
person or by proxy, shall elect a successor to hold office for the
unexpired term of such Series A Director whose place shall be vacant, by
the affirmative vote of the holders of a majority of the outstanding
shares of Series A Preferred, voting in person or by proxy, voting as a
separate voting group, at a special meeting called for that purpose at
which a quorum is present or pursuant to a written consent of the holders
of not less than a majority of the outstanding shares of the Series A
Preferred. In the event all the shares of Series A Preferred
are converted or redeemed pursuant to the terms hereof, then the holders
of the Common Shares shall be entitled to elect all directors of the
Corporation.
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Section
3. Dividends.
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(a)
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The
holders of the Series A Preferred shall be entitled to receive dividends
from any funds legally available therefor equal to the greater of (i) the
rate of ten percent (10%) of the Series A Stated Value per annum, which
shall accrue from the date of issuance whether or not declared, shall
compound annually and shall be cumulative, and (ii) the amount the Series
A Preferred would be entitled to receive on an as-if-converted basis with
respect to dividends paid on the Common Stock. To the extent
that the Corporation has positive Distributable Cash Flow (as defined
below) in any calendar quarter, the Corporation shall be required to pay
from any funds legally available therefor a cash dividend to the holders
of the Series A Preferred in the amount equal to the lesser of (i) 50% of
such positive Distributable Cash Flow or (ii) the aggregate amount of
dividends accrued on the Series A Preferred. For purposes
hereof, “Distributable Cash
Flow” shall mean as of the end of each calendar quarter the
Corporation’s earnings before interest expense, income taxes, depreciation
and amortization but after required interest payments on any of the
Corporation’s debt to third parties for borrowed money or to finance the
acquisition of assets. Such dividend shall be due and payable
on March 15, June 15, September 15 and December 15 of
each year (each such date or the next business date if such date is not a
business day, a “Dividend Payment
Date”) with the first Dividend Payment Date to be March 15,
2011. No dividend shall be paid on Common Shares (i) at a rate
greater than the rate at which dividends are paid on the Series A
Preferred and (ii) until all accrued dividends on the Series A Preferred
have been paid in full.
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(b)
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In
no event, so long as any shares of Series A Preferred shall remain
outstanding, shall any dividend whatsoever be declared or paid upon, nor
shall any distribution be made upon, any other capital stock of the
Corporation, nor shall any other capital stock of the Corporation be
purchased or redeemed by the Corporation, nor shall any monies be paid to
or made available for a sinking fund for the purchase or redemption of any
other capital stock of the Corporation, unless in each instance dividends
on all outstanding shares of the Series A Preferred for all Dividend
Payment Dates shall have been accrued and paid in full and the full
dividend on all outstanding shares of the Series A Preferred for the
then-current dividend payment due shall have been accrued and paid in full
or declared and sufficient funds for the payment thereof set
apart.
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Section
4. Conversion.
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(a)
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Optional Conversion
Prior to a Liquidation or Redemption. Each holder of
shares of Series A Preferred shall have the right at any time and from
time to time on or prior to the date of a Liquidation Event (as defined in
Section
7), as set forth in the Liquidation Notice (as defined in Section 7), at
such holder’s option, to convert any or all of the shares of Series A
Preferred held by such holder into the number of fully paid and
non-assessable shares of Common Stock obtained by multiplying the number
of shares of Series A Preferred to be converted by the “Series A Preferred
Conversion Rate”, as determined from time to time pursuant to this
Section
4. The initial Series A Preferred Conversion Rate shall
be 4.0.
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(b)
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Automatic
Conversion. All outstanding shares of Series A Preferred
shall be automatically converted into fully paid and non-assessable shares
of Common Stock, at the then applicable Series A Preferred Conversion
Rate, at the election of the holders of a majority of the then outstanding
shares of the Series A Preferred.
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(c)
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Mechanics of
Conversion. Before any holder of shares of Series A
Preferred converts any such shares into shares of Common Stock, such
holder shall surrender the certificate or certificates evidencing the
shares to be converted, duly endorsed, at the principal office of the
Corporation and shall give written notice to the Corporation at such
office of the election to convert such shares into shares of Common
Stock. The notice shall state the number of the shares of
Series A Preferred to be converted and the name in which the
certificate(s) for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder, a certificate or certificates for the number
of full shares of Common Stock to which such holder is
entitled. Any conversion shall be deemed to occur immediately
prior to the close of business on the date of surrender of the shares to
be converted, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on
such date and shall no longer be entitled to any dividends paid or accrued
thereafter on the Series A Preferred. To the extent permitted
by law, when shares of Series A Preferred are converted, all dividends
accrued and unpaid on the shares of Series A Preferred so converted on the
date of conversion shall be immediately due and payable and must accompany
the shares of Common Stock issued upon such
conversion.
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(d)
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No Fractional
Shares. No fractional shares of Common Stock or scrip
shall be issued upon conversion of the shares of Series A
Preferred. If a holder surrenders for conversion more than one
share of Series A Preferred at any time, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed using the
aggregate number of shares of Series A Preferred so
surrendered. Instead of issuing any fractional shares of Common
Stock that would otherwise be issuable upon conversion of any of the
shares of Series A Preferred, the Corporation shall round down to the
nearest whole number of shares of Common Stock and pay to such holder cash
equal to the fair market value of such fraction on the date of conversion
(as determined in good faith by the
Board).
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(e)
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Adjustment of
Conversion Rate. The Series A Preferred Conversion Rate
shall be subject to adjustment from time to time as
follows:
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(i)
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Effect of “Split-ups”
and “Split-downs”; Stock Dividends. If at any time or
from time to time the Corporation shall subdivide as a whole, by
reclassification, by the issuance of a stock dividend on the shares of
Common Stock payable in shares of Common Stock, or otherwise, the number
of shares of Common Stock, with or without par value, the Series A
Preferred Conversion Rate shall be increased proportionately as of the
effective or record date of such action by multiplying the Series A
Preferred Conversion Rate, respectively, by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding
immediately prior to the applicable record date plus the additional number
of shares of Common Stock necessary to effect such reclassification, stock
dividend or otherwise, and the denominator shall be the number of shares
of Common Stock outstanding immediately prior to the applicable record
date. The issuance of such a stock dividend shall be treated as
a subdivision of the whole number of shares of Common Stock outstanding
immediately before the record date for such dividend into a number of
shares equal to such whole number of shares so outstanding plus the number
of shares issued as a stock dividend. In case at any time or
from time to time the Corporation shall combine as a whole, by
reclassification or otherwise, the number of shares of Common Stock then
outstanding into a lesser number of shares of Common Stock, with or
without par value, the Series A Preferred Conversion Rate shall be reduced
proportionately as of the effective date of such action by multiplying the
Series A Preferred Conversion Rate by a fraction, the numerator of which
shall be the number of shares of Common Stock which would be outstanding
immediately after giving effect to such reclassification, stock dividend
or otherwise without regard to this Section, and the denominator shall be
the number of shares of Common Stock outstanding immediately prior to the
applicable record date. Notwithstanding the foregoing, in the
event that any record date for a subdivision or combination of shares of
Common Stock or for the issuance of a stock dividend is fixed but such
subdivision, combination or issuance is not fully effected or made on the
date fixed therefor, the Series A Preferred Conversion Rate shall be
recomputed accordingly as of the close of business on such date and
thereafter only adjusted to reflect the subsequent actual effect of such
subdivision, combination or
issuance.
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(ii)
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Effect of Certain
Dividends. If on any date the Corporation makes a
distribution (other than a distribution consisting only of Common Shares)
to holders of its Common Shares but not the holders of Series A Preferred
(including any such distribution made in connection with a consolidation
or merger in which the Corporation is the continuing corporation), the
holders of the Series A Preferred shall be entitled to receive a portion
of such distribution equal to the amount each such holder would have
received if such holder had converted all of its shares of Series A
Preferred into Common Shares immediately prior to the record date for such
distribution.
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(iii)
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Effect of Merger or
Consolidation. If the Corporation shall, while any
shares of Series A Preferred remain outstanding, enter into any
consolidation with or merge into any other corporation wherein the
Corporation is not the continuing corporation, or wherein securities of a
corporation other than the Corporation are distributable to holders of
Common Shares of the Corporation, or sell or convey its property as an
entirety or substantially as an entirety (other than any Liquidation
Event), and in connection with such consolidation, merger, sale or
conveyance, shares of stock or other securities shall be issuable or
deliverable in exchange for the shares of Common Stock of the Corporation,
the holder of any shares of Series A Preferred shall thereafter be
entitled to obtain on account of such Series A Preferred (in lieu of the
number of shares of Common Stock that such holder would have been entitled
to receive if such holder had converted its shares of Series A Preferred
immediately before the effective date of such consolidation, merger, sale
or conveyance) the shares of stock or other securities to which such
number of shares of Common Stock would have been entitled if such shares
of Series A Preferred had been converted immediately before such
consolidation, merger, sale or conveyance. In case of any such
consolidation, merger, sale or conveyance, appropriate provision (as
determined by a resolution of the Board) shall be made with respect to the
rights and interests thereafter of the holders of Series A Preferred to
the end that all the provisions of Sections 3,
4, 5 and 6 hereof
(including adjustment provisions) shall thereafter be applicable as nearly
as reasonably practicable, in relation to such stock or other
securities.
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(iv)
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Reorganization and
Reclassification. In case of any capital reorganization
or any reclassification of the capital stock of the Corporation (except as
provided in Section 4(e)(i)
herein or pursuant to a Liquidation Event) while any shares of Series A
Preferred remain outstanding, the holder of any shares of Series A
Preferred shall thereafter be entitled to receive upon conversion of such
Series A Preferred (in lieu of the number of shares of Common Stock that
such holder would have been entitled to receive if such holder had
converted immediately before such reorganization or reclassification) the
shares of stock of any class or classes or other securities or property to
which such number of shares of Common Stock would have been entitled if
such shares of Series A Preferred had been converted immediately before
such reorganization or reclassification. In case of any such
reorganization or reclassification, appropriate provision (as determined
by resolution of the Board) shall be made with respect to the rights and
interests thereafter of the holders of Series A Preferred, to the end that
all the provisions of Sections 3,
4, 5 and 6 hereof
(including adjustment provisions) shall thereafter be applicable, as
nearly as reasonably practicable, in relation to such stock or other
securities or property.
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(v)
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Adjustment of
Conversion Rate after a “Diluting Issue”. If on any date
on or after the date on which the Corporation first issues shares of
Series A Preferred (the “Original Issue
Date”), any additional Common Shares (other than Excluded
Securities, as hereinafter defined) shall be issued for a consideration
per share (or, in the case of any transactions contemplated in Section
4(e)(v)(B) or 4(e)(v)(C)
herein, shall be deemed to be issued on or after the date hereof for a
Presumed Consideration (as defined in Section
4(e)(vi)(F)(II) herein)
per share) less than the Current Conversion Price (as defined in Section
4(e)(v)(F)(II) herein) on the date such Common Shares were issued
or deemed to have been issued, the Series A Preferred Conversion Rate
shall be adjusted at the close of business on such date to equal the
product resulting from the multiplication of (x) the Series A Preferred
Conversion Rate, immediately before such issuance or deemed issuance of
Common Shares (as may have been previously adjusted) by (y) a fraction,
(I) the numerator of which is the total number of Common Shares
outstanding (as defined below) immediately before such issue plus the
number of additional shares being issued, and (II) the denominator of
which is the total number of Common Shares outstanding immediately prior
to such issue plus the number of Common Shares that the aggregate
consideration received (or, without duplication, the Presumed
Consideration deemed to have been received) for the total number of
additional shares so issued would purchase at the Current Conversion Price
on such date. For the purpose of the calculation described in
this Section
4(e)(v), the number of Common Shares outstanding will include (1)
the number of Common Shares outstanding; (2) the number of shares of
Common Stock into which the then outstanding shares of Series A Preferred
could be fully converted on the day preceding the issuance or deemed
issuance of the applicable Common Shares; and (3) the number of Common
Shares which could be obtained through the conversion of all Convertible
Securities (as defined in Section
4(e)(vi)) which are convertible on the day next preceding the
issuance or deemed issuance of the applicable Common
Shares.
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For the
purpose of this Section 4(e)(v), the
following provisions shall be applicable with respect to the issuance of
additional Common Shares and the computation set forth in the immediately
preceding paragraph:
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(A)
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Stock Dividends,
etc. In case on or after the Original Issue Date any
additional Common Shares shall be issued as a dividend on any class of
stock of the Corporation other than Common Shares (in which case Section 4(e)(i)
hereof shall apply) or Series A Preferred (in which case Section 3
herein shall apply), such Common Shares shall be deemed to have been
issued without consideration on the day immediately succeeding the date
for the determination of stockholders entitled to such
dividend.
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(B)
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Rights or Options
below Current Conversion Price. In case the Corporation
shall on or after the Original Issue Date grant any rights or options
(other than any rights or options that are Excluded Securities) to
subscribe for or to purchase additional Common Shares or Convertible
Securities, and the Presumed Consideration per share received and
receivable by the Corporation for such additional shares under such rights
or options shall be less than the Current Conversion Price in effect
immediately prior to the granting of such rights or options, the maximum
number of additional Common Shares issuable pursuant to such rights or
options or upon the conversion or exchange of all such Convertible
Securities, in each case without regard to any anti-dilution provisions
applicable to such rights, options or Convertible Securities, shall be
deemed to have been issued as of the date of the granting of such rights
or options, and the Corporation shall be deemed to have received the
Presumed Consideration therefor. No adjustment (except as
provided in Section
4(e)(v)(D) herein) shall be made upon the actual issuance of Common
Shares, upon the exercise of rights or options referenced in this Section
4(e)(v)(B) or the conversion of Convertible Securities referenced
in this Section
4(e)(v)(B).
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(C)
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Securities Convertible
below Current Conversion Price. In
case:
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(I)
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the
Corporation shall on or after the Original Issue Date issue any
Convertible Securities (other than Excluded Securities or as a dividend on
Common Shares (in which case Section
4(e)(ii) shall apply) or as a dividend on shares of Series A
Preferred (in which case Section 3 shall
apply)), and
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(II)
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the
Presumed Consideration per share for additional Common Shares issuable
pursuant to the terms of such Convertible Securities shall be less than
the Current Conversion Price in effect immediately prior to the time of
the issuance of such Convertible Securities, then the issuance of such
Convertible Securities shall be deemed to be an issuance (as of the date
of issuance of such Convertible Securities) of the maximum number of
additional Common Shares issuable pursuant to all such Convertible
Securities (without regard to any anti-dilution provisions applicable to
such Convertible Securities), and the Corporation shall be deemed to have
received the Presumed Consideration therefor as of the date of issuance of
such Convertible Securities. No further adjustment, except as
provided in Section
4(e)(v)(D) herein, shall be made upon the actual issuance of Common
Shares upon the conversion of Convertible
Securities.
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(D)
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Superseding Adjustment
of Conversion Rate. If, at any time after any adjustment
of the Series A Preferred Conversion Rate shall have been made on the
basis of Common Shares deemed to be issued by reason of the provisions of
the foregoing Sections 4(e)(v)(B)
or 4(e)(v)(C) on
the basis of the granting of certain rights or options or the issuance of
certain Convertible Securities, or after any new adjustments of the Series
A Preferred Conversion Rate shall have been made on the basis of Common
Shares deemed to be issued by reason of the provisions of this Section
4(e)(v)(D), such rights or options or the right of conversion or
exchange in any such Convertible Securities shall expire, and less than
the maximum number of Common Shares issuable in respect of such rights or
options, or the right of conversion or exchange in respect of such
Convertible Securities, as the case may be, shall have been issued, or if
a greater amount of consideration than the Presumed Consideration shall be
received by the Corporation in connection with the exercise of any such
rights, options or Convertible Securities, then such previous adjustment
shall be adjusted as appropriate to reflect the actual number of Common
Shares issued and the actual amount of consideration received by the
Corporation, as applicable.
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(E)
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Effect of “Split-up”
or “Split-down” on “deemed issued” shares. Upon the
effective or record date for any subdivision or combination of the Common
Shares of the character described in Section 4(e)(i)
hereof, including the issuance of a stock dividend that is treated as such
a subdivision under Section
4(e)(v)(A) herein, the number of the Common Shares that are at the
time deemed to have been issued by virtue of Sections 4(e)(v)(B)
or 4(e)(v)(C)
herein, but have not actually been issued, shall be deemed to be increased
or decreased proportionately.
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(F)
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Computation of
Consideration and Presumed Consideration. For the
purposes of this Section
4(e):
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(I)
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The
per share consideration received by the Corporation upon the actual
issuance of additional Common Shares shall be deemed to be the quotient of
(a) the sum of the amount of cash and the fair value of property (as
determined in good faith by resolution of the Board at the time of issue)
received by the Corporation as consideration at the time of issuance of
the Common Shares, in each case without deduction for commissions and
expenses incurred by the Corporation for any underwriting of, or otherwise
in connection with the issue or sale of, such Common Shares, divided by
(b) the aggregate number of Common Shares actually
issued;
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(II)
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The
per share consideration deemed to have been received by the Corporation
for additional Common Shares deemed to be issued pursuant to rights,
options and Convertible Securities of the character described in Sections 4(e)(v)(B)
and 4(e)(v)(C)
hereof (the “Presumed
Consideration”) shall be the quotient of (a) the sum of the amount
of cash and the fair value of property (as determined in good faith by
resolution of the Board at the time of “deemed issue”), if any, received
or receivable by the Corporation as consideration for the issue of such
rights, options or Convertible Securities, plus the sum of the minimum
aggregate amount of additional cash and the fair value of property (as
determined in good faith by resolution of the Board at the time of “deemed
issue”) payable to the Corporation upon the exercise in full of such
rights or options or the conversion or exchange of all such Convertible
Securities (or, in the case of rights or options for Convertible
Securities, the exercise in full of such rights or options for Convertible
Securities and the conversion or exchange of all such Convertible
Securities), divided by (b) the maximum number of Common Shares
(without regard to any anti-dilution provisions applicable to such rights,
options or Convertible Securities) issuable upon the exercise of such
rights or options or conversion or exchange of such Convertible
Securities.
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(vi)
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Determination by the
Board. All determinations by the Board under the
provisions of this Section 4(e)
shall be made in good faith with due regard to the interests of the
holders of Series A Preferred and the other holders of securities of the
Corporation and in accordance with good financial practice, and all
valuations made by the Board under the terms of this Section 4(e)
must be made with due regard to any market quotations of securities
involved in, or related to, the subject of such
valuation.
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Unless
the context otherwise requires, the following terms have the following
respective meanings:
“Common Shares” means
(i) shares of Common Stock, and (ii) shares of stock of the Corporation of any
class hereafter authorized that ranks, or is entitled to a participation, as to
assets or dividends, substantially on a parity with Common Stock.
“Convertible
Securities” shall mean any obligations or stock convertible into or
exchangeable for Common Shares.
“Current Conversion
Price” shall initially mean $0.58 and shall be adjusted each time there
is an adjustment in the Series A Preferred Conversion Rate to equal the product
of the Current Conversion Price as in effect before such adjustment multiplied
by a fraction in which the numerator is equal to the pre-adjustment
Series A Preferred Conversion Rate and the denominator is equal to the
as-adjusted Series A Preferred Conversion Rate.
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(f)
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Notice to
Holders. In the event the Corporation shall propose to
take any action of the types described in Section
4(e)(ii) or 4(e)(iii)
herein, the Corporation shall give notice to each holder of Series A
Preferred, which notice shall specify the record date, if any, with
respect to any such action and the date on which such action is to take
place. Such notice shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such
action (to the extent such effect may be known at the date of such notice)
on the Series A Preferred Conversion Rate and the number, kind or class of
shares or other securities or property that shall be deliverable or
purchasable upon the occurrence of such action or deliverable upon
conversion of the shares of Series A Preferred. In the case of
any action that would require the fixing of a record date, such notice
shall be given at least ten (10) days prior to the date so fixed, and in
case of all other action, such notice shall be given at least ten (10)
days prior to the taking of such proposed
action.
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(g)
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Shares Free and
Clear. All shares of Common Stock issued in connection
with the conversion provisions set forth herein shall be, upon issuance by
the Corporation, validly issued, fully paid and nonassessable and free
from all taxes, liens or charges with respect thereto created or imposed
by the Corporation.
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(h)
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Certificate as to
Adjustments. Upon the occurrence of each adjustment of
the Series A Preferred Conversion Rate for any shares pursuant to Section 4
hereof, the Corporation at its expense shall promptly compute such
adjustment in accordance with the terms hereof and furnish to each holder
of Series A Preferred a certificate setting forth such adjustment and
showing in detail the facts upon which such adjustment is
based. The Corporation shall, upon the written request at any
time of any holder of Series A Preferred, furnish or cause to be furnished
to such holder a like certificate setting forth (a) the Series A Preferred
Conversion Rate at that time in effect and (b) the number of shares of
Common Stock and the amount, if any, of other property which at the time
would be received upon the conversion of shares of Series A
Preferred. The Corporation shall file a like certificate among
its permanent records and at all reasonable times during business hours
shall permit inspection of such certificate by any holder of Series A
Preferred requesting such
inspection.
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(i)
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Common Stock
Reserved. The Corporation shall reserve and keep
available out of its authorized but unissued shares of Common Stock such
number of shares of Common Stock as shall from time to time be sufficient
to effect conversion of the shares of Series A
Preferred.
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13
Section
5. Optional
Redemption.
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(a)
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At
any time and from time to time after the fifth anniversary of the Original
Issue Date, the holders of a majority of the then issued and outstanding
shares of Series A Preferred, voting together as separate class, may
require the Corporation to redeem (to the extent that such redemption
shall not violate any applicable provisions of the laws of the State of
Delaware), all of the then issued and outstanding shares of Series A
Preferred at the Redemption Price per share (for purposes of Section 5, the
“Redemption
Demand”); provided, however, that
such redemption shall occur in three equal annual installments, with the
first of such installments due (subject to the last sentence of this Section 5(a))
sixty (60) days following the Corporation’s receipt of the Redemption
Demand and the second and third such installments due (subject to the last
sentence of this Section 5(a))
on the first and second anniversaries, respectively, of the due date for
the first installment. The “Redemption
Price” shall mean, with respect to each share of Series A
Preferred, an amount equal to the sum of (i) the Series A Preferred Stated
Value thereof (subject to adjustment in the event of any stock dividend,
stock split, stock distribution or combination with respect to such
shares), plus (ii) all accrued but unpaid dividends thereon to the
applicable Redemption Date (as defined below). If upon any
Redemption Date, the Corporation is unable to redeem any shares of Series
A Preferred then required pursuant to this Section 5 to be
redeemed because such redemption would violate the applicable laws of the
State of Delaware, then the Corporation shall redeem such shares as soon
thereafter as redemption would not violate such
laws.
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(b)
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Within
five (5) days after the Corporation receives the Redemption Demand,
written notice shall be mailed, postage prepaid, to each holder of the
Series A Preferred, at his or its post office address last shown on the
records of the Corporation, notifying such holder of the number of shares
so to be redeemed, specifying the dates such shares are to be redeemed
(for purposes of Section 5, each
such date being referred to as a “Redemption
Date”) and calling upon such holder to surrender to the
Corporation, in the manner and at the place designated, his or its
certificate or certificates representing the shares of Series A Preferred
to be redeemed (for purposes of Section 5, the
“Redemption
Notice”) on each such Redemption Date. Upon surrender of
such certificate or certificates to the Corporation, in the manner and at
the place designated in the Redemption Notice, the Corporation shall pay
the Redemption Price of such shares of Series A Preferred being
redeemed immediately payable to the order of the person whose name appears
on such certificate or certificates as the owner thereof and each
surrendered certificate shall be cancelled; provided, however, that
each holder of Series A Preferred shall have the rights, at any time prior
to each Redemption Date (unless the Corporation defaults in the payment of
the Redemption Price, in which case such right shall not terminate at such
time and date), to convert its shares of Series A Preferred into shares of
Common Stock as provided in Section 5
hereof. From and after each Redemption Date, unless there shall
have been a default in payment of the applicable Redemption Price, all
rights of the holders of Series A Preferred of the Corporation with
respect to the shares of Series A Preferred redeemed on such
Redemption Date (except the right to receive the Redemption Price without
interest upon surrender of their certificate or certificates) shall cease,
and such shares of Series A Preferred shall not thereafter be transferred
on the books of the Corporation or be deemed to be outstanding for any
purpose whatsoever.
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(c)
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Except
as provided in this Section 5 the
Corporation shall have no right to redeem the shares of Series A
Preferred. Any shares of Series A Preferred so redeemed shall
be permanently retired, shall no longer be deemed outstanding and shall
not under any circumstances be reissued, and the Corporation may from time
to time take such appropriate corporate action as may be necessary to
reduce the authorized number of Series A Preferred
accordingly.
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Section
6. Miscellaneous.
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(a)
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Registration of
Transfer. The Corporation shall keep at its principal
office a register for the registration of shares of Series A
Preferred. Upon the surrender at its principal office of any
certificate representing shares of Series A Preferred, the Corporation
shall, at the request of the record holder of such certificate, execute
and deliver (at the Corporation’s expense) a new certificate or
certificates in exchange therefor representing in the aggregate the number
of shares represented by the surrendered certificate. Each such
new certificate will be registered in such name and will represent such
number of shares as is requested by the holder of the surrendered
certificate (subject to the immediately preceding sentence) and will be
substantially identical in form to the surrendered
certificate.
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(b)
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Replacement. Upon
receipt of evidence, and an agreement to indemnify reasonably satisfactory
to the Corporation (an affidavit of the registered holder, without bond,
will be satisfactory), of the ownership and the loss, theft, destruction
or mutilation of any certificate evidencing one or more shares of Series A
Preferred, the Corporation will (at its expense) execute and deliver in
lieu of such certificate a new certificate representing the number of
shares represented by such lost, stolen, destroyed or mutilated
certificate.
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(c)
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Amendment and
Waiver. No amendment, modification or waiver of any of
the terms of this Section 6 will
be binding or effective without the prior written consent of holders of a
majority of the shares of Series A Preferred at the time such action is
taken.
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(d)
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Notices. All
notices referred to herein, except as otherwise provided, will be hand
delivered or made by registered or certified mail, return receipt
requested, postage prepaid, or by overnight courier and will be deemed to
have been given when so hand delivered or
mailed.
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15
Section
7. Liquidation
Preference. Upon the occurrence of a Liquidation Event (as
defined herein), the Corporation shall first make such payments to the holders
of the Series A Preferred, and thereafter to the holders of the Series A
Preferred and the Common Shares, all in accordance with this Section
7. Upon a Change in Control or any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary (in each case, a
“Liquidation
Event”), all amounts and funds of the Corporation legally available for
distribution shall be distributed as follows:
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(a)
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First. The
holders of the Series A Preferred then outstanding shall be entitled to
receive and to be paid out of the assets or surplus funds of the
Corporation available for distribution to its stockholders, prior to and
in preference to any payments to be made to the holders of the Common
Shares, an amount per share equal to the sum of (i) the Series A Stated
Value as adjusted for any stock dividends, combinations or splits with
respect to such shares plus (ii) all accrued but unpaid dividends through
the Liquidation Event, as adjusted for any stock dividends, combinations
or splits with respect to such shares (the “Series A Liquidation
Preference”).
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(b)
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Second. The
holders of the Series A Preferred and the Common Shares shall receive all
remaining assets and funds of the Corporation legally available for
distribution (after the payments to the holders of the Series A Preferred
described in Section 7(a)
hereof) in proportion to the Common Shares held by each holder and the
shares of Common Stock that each holder of the Series A Preferred has the
right to acquire upon conversion of the shares of the Series A Preferred
held by such holder; provided, however, that
the holders of the Series A Preferred shall not be entitled to receive by
operation of Section 5(a)
and this Section
5(b) an amount per share of Series A Preferred in excess of
four (4) times the Series A Stated Value (as adjusted for any stock
dividends, combinations or splits with respect to such
shares).
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If upon
such Liquidation Event, the assets of the Corporation are insufficient to pay
the applicable preferential amount to the holders of shares of Series A
Preferred as described in Section 7(a) herein,
the assets of the Corporation will be distributed among the holders of Series A
Preferred on a pro rata
basis according to the amounts each holder was entitled to receive under Section 7(a)
herein.
The
Corporation will mail written notice of such Liquidation Event, not less than
ten (10) days prior to the payment date stated herein, to each record holder of
Series A Preferred. The purchase or redemption by the Corporation of
stock of any class, in any manner permitted by law, shall not for the purpose of
this Section 7
be regarded as a Liquidation Event of the Corporation.
[REST OF
PAGE INTENTIONALLY LEFT BLANK]
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IN
WITNESS WHEREOF, Transgenomic, Inc. has caused this Certificate of Designation
to be executed by its duly authorized officer on December 28, 2010.
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TRANSGENOMIC,
INC.
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By:
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/s/ Craig J. Tuttle
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Name: Craig
J. Tuttle
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Title: Chief
Executive Officer and
President
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17